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When should I buy to minimize my costs and sell to maximize the profits?

Buy at a lower price and sell at a higher price. Many investors just do the opposite

04 Dec 2008

Buy low and sell high. It is that simple. Now, it is another matter that many investors do exactly the opposite. This happens because, for such investors, price movement is their sole signal to buy and sell. They are tempted to buy stocks that are on an upswing, in the media glare; little realizing that they are buying the stock at a premium. Ironically enough, it most often comes about that that's actually the time to sell, not buy, with the stock at or near the top of its performance.

 

The opposite is also true when a stock's price is tanking faster than a shooting star, many investors panic and want to sell. All this, in spite of the company not having lost any intrinsic value and still being a sound fundamental investment. Fact is, when a stock's price has fallen, it's a great time to buy, especially if your research suggests that the company has strong fundamentals and is a good long-term buy.

 

Experienced traders and speculators might get away making money on a stock's price movements. It is NOT a game for the inexperienced or the serious long-term investor. It can hardly be called investing, this speculation based on short-term price movements. The risks involved and tax consequences that apply to such trading should discourage the serious investor from such practices.



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